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TMI Blog2012 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ashtra. 2. The petitioners reside in a joint-family with their parents and are silver artisans and manufacturing silver articles and doing business separately. They are assessed to Income tax separately. 3. The petitioners have been carrying on business of purchase and sale of silver as well as articles made of silver after manufacturing those from the silver purchased by them on 'Badala Majuri' system, i.e. business of manufacturing of silver articles on job basis. 4. The petitioners, during the course of business over a period of time, accumulated stock of silver while doing the job-work due to difference in tounchs of silver and such gain is credited in the day-to-day Stock Register and closing stock under the head 'increase in silver account' since the beginning of the system. 5. All the manufacturing job, purchases and sales of silver and silver articles are supported by bills and vouchers with quantity details since the beginning of the business in the year 1992 by the petitioners and the same are duly reflected in the respective Income Tax Returns filed with the office of the respondent No.2. 6. The petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 registered under section 124 of the Bombay Police Act thereby acquitting the petitioner No.2 and the two other persons who were travelling with him of the charges of section 124 of the Bombay Police Act. The learned Magistrate passed order to handover the muddamal silver articles/ornaments to the petitioner No.2 after the period for filing appeal against the said judgment was over. 13. On May 31, 2011, the respondent No.1 filed an application before the Judicial Magistrate First Class, Pardi, to stay the judgment dated April 28, 2011 as the respondent No.1 intended to challenge the said judgment by way of an appeal. 14. The learned Magistrate, therefore, stayed the operation and implementation of his judgment till June 16, 2011. 15. The respondent No.1 thereafter preferred an appeal before the Court of District and Sessions Judge, Valsad being Criminal Appeal No. 7 of 2011. 16. In the said Criminal Appeal, the respondent No.1 also filed an application for stay of the judgment dated April 28, 2011 passed by the learned Magistrate in Criminal Case No. 179 of 2011 till the final disposal of the appeal and for a direction upon the respondent No.4 not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contend that the silver ornaments seized are the stock-in-trade of the petitioners according to the stock register maintained by them, and as such, there was no justification of issuing the notice impugned in this writ-application. 23. The petitioners thus contend that the authorization issued by the respondent No.1 under section 132A of the Act is without any jurisdiction and contrary to the provisions of CBDT circulars and was issued in gross violation of Article 14 and 19 of the Constitution of India. 24. Apart from the aforesaid contentions, the petitioners have further contended that the action taken under section 132A of the Act to receive possession of the silver ornaments/articles, which are in custody of the respondent No.4, can be put into action only if clause (c) of section 132A(1) of the Act is attracted. According to them, in the instant case, the said provision being not attracted, the authorization issued by the respondent No.1 under section 132A of the Act is patently illegal. 25. The petitioners have further contended that at the time of issue of the impugned warrant, the silver articles/ornaments were in the possession of the Criminal Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16, 2012, the Income Tax Officer [Investigation] Unit-III Kolhapur at the address mentioned in PAN database conducted a commission inquiry at Kolhapur under section 131 of the Income Tax Act. As stated by Sanjay Vidyadhar Gaat in the statement recorded under section 131 of the Act, inquiry was also conducted at the shop from where the silver business was carried out. The shop was found to be closed. Sunil Vidyadhar Gaat, the brother of Sanjay Vidyadhar Gaat, who is stated to be carrying on business with Sanjay Vidyadhar Gaat, was not present for inquiry. Inquiry regarding various aspects of silver business was made from Vidyadhar Gaat, the father of Sanjay Gaat. He was unable to produce books of accounts of the business or give any information on stock of silver and as to the fact whether books, bills etc. were maintained. He could not also provide any information about the ownership of the seized silver ornaments. 8. On February 16, 2011, a warrant of requisition was issued under section 132A of the Act, after recording of satisfaction note on the issue. The same was served on Senior Police Inspector of Pardi Police Station on February 17, 2011 with a request to hando ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in this Court subject to final decision of the authorities under the Act. 1. Mr. Karia lastly contended that the notice under section132A of the Act was itself bad as the same was issued at a point of time when the silver articles were in the custody of the Court, and thus, the notice should be set aside on that ground alone. 6. Mr. Bhatt, learned senior counsel appearing on behalf of the Revenue, on the other hand, opposed the aforesaid contentions of Mr. Karia and has contended that having regard to the materials available on record, there is no justification of branding the notice as a mala fide one. Mr. Bhatt contends that the requisition was made to the police authorities when the same was in the custody of the police and thus, the contention of Mr. Karia that the notice is illegal is not tenable. Mr. Bhatt further contends that within the narrow scope of jurisdiction under Article 226 of the Constitution of India, this Court should not pass any order, which would prevent the Income Tax authorities from proceeding in accordance with law. Mr. Bhatt contends that all the formalities required under the Income Tax Act for issue of notice under section 132A having b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Commissioner or Joint Director or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner of Deputy Commissioner or Income-tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to - (i) enter and search any building , place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the look of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (iia) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that a such person has secreted about his person any such books of account, other documents, money bullion, jewellery or other valuable article or thing; (iib). require any person who is found to be in possession or control of any books of account or other documents maintained in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so. (1A) Where any Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the Director General or Director or any other Chief Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such Chief Commissioner or Commissioner may, notwithstanding any thing contained in section 120, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, vehicle or aircraft. (2) The authorised officer may requisition the services of any police officer or of any officer of the Central Government or of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] (5) omitted (6) omitted (7) omitted (8) The books of account or other documents seized under sub-section (1) or sub-section (1A) shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment under section 153A or clause (c) of section 158BC unless the reasons for retaining the same are recorded by him in writing and the approval of the Chief Commissioner, Commissioner, Director General or Director for such retention is obtained: Provided that the Chief Commissioner, Commissioner, Director General or Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the India Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1. For the purpose of sub-section (9A), "execution of an authorisation for search" shall have the same meaning as assigned to it in Explanation 2 to section 158BE. Explanation 2.- In this section, the word "proceeding" means any proceeding in respect of any year, whether under the Indian Income-tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year. 132A. Powers to requisition books of account, etc. (1) Where the Director General or Director or the Chief Commissioner or Commissioner, in consequence of information in his possession, has reason to believe that- (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. 2. Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub-sections (4A) to (14) (both inclusive) of section 132 and section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this section and as if for the words "the authorised officer" occurring in any of the aforesaid sub-sections (4A) to (14), the words "the requisitioning officer" were substituted. (Emphasis supplied by us). 9. After hearing the learned counsel for the parties and after going through the materials on record including the provisions of the Act under which the proceedings have been initiated we find that the restriction placed by the provisions of Sections 132, 132-A or Rules 112-A are not unreasonable restrictions on the freedom under Articles 19 (1) (f) and (g) or A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 132A, must be decided by the said authority and not by the High Court. The concerned authority under Section 132A alone is entrusted with the power to administer the same. If from the materials disclosed it may be prima facie said that he had reason to believe that any of those conditions existed, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside the warrant of authorization on a re-appraisal of the evidence. On the other hand, if the writ-petitioner can establish mala fides on the part of the authorities concerned or that in the circumstances, no reasonable person would come to the conclusion that the conditions mentioned therein existed, the High Court can interfere at that stage. 14. Bearing in mind the aforesaid principles, we now propose to examine the materials on record placed before us. 1. In the case before us, no documentary evidence was produced by the persons carrying silver ornaments/articles in response to inquiries made at the time of recording of statements under section131 of the Act on February 14, 2011 and February 15, 2011 to establish source, acquisition and ownership of the said s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Babu Rao v. Inspector of Police and another reported in [1991] 190 ITR 616 (Mad) taking a contrary view. 16. In order to appreciate the aforesaid question, it will be profitable to refer to the provisions of Section 451 of the Code of Criminal Procedure which is quoted below: "451. Order for custody and disposal of property pending trial in certain cases. When any property is produced before any Criminal Court during any inquiry or trial, the Court may make such order as it thinks fit for the proper custody of such property pending the conclusion of the inquiry or trial, and, if the property is subject to speedy and natural decay, or if it is otherwise expedient so to do, the Court may, after recording such evidence as it thinks necessary, order it to be sold or otherwise disposed of. Explanation.- For the purpose of this section, "property" includes - (a) property of any kind or document which is produced before the Court or which is in its custody, (b) any property regarding which an offence appears to have been committed or which appears to have been used for the commission of any offence." 17. A plain reading of the aforesaid provision lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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